Wilson Vetoes Education Bill; Legislators Seek Compromise : Finances: Lawmakers try to head off a collision with the governor and clear the way for passage of $57.6-billion state budget package.

SACRAMENTO —  State lawmakers early today were trying to cobble together the final remaining pieces of California’s long-delayed budget package in hopes of persuading Gov. Pete Wilson to sign the $57.6-billion spending plan on his desk.

Wilson vetoed a Democrat-backed education bill moments after it reached his desk at midnight, prompting members of both parties to seek an alternative that the Democrats could vote for and the governor would sign, clearing the way for his acceptance of the entire budget pacakge.

“We’re hopeful,” said Assemblyman Pat Nolan of Glendale, the chief architect of a plan meant to head off a collision that threatened to blow up the fragile budget compromise that had been fashioned over the weekend.

But outside the chambers, a delegation of education lobbyists tried until the last moment to kill the deal. At their urging, Democrats passed with only token Republican support an alternative measure even though Wilson had vowed to veto it. The Assembly passed that measure just before midnight and sent it to the Senate, which passed it to the governor moments later. Wilson vetoed it within minutes.

Earlier Monday, the Assembly passed and sent to the Senate for final action legislation to cut $1.7 billion from health and welfare programs and shift $1.3 billion in property tax revenues from local government to help close the state’s $10.7-billion budget gap.

Wilson said he would not sign the budget until the Legislature passed those two bills, the schools legislation and about 10 other measures related to the budget. Without those “trailer bills,” the governor said, the spending plan would be $5 billion out of balance.

The Legislature faced two alternatives if it failed to complete its budget work by today. The lawmakers could extend their session and continue to pass bills as long as each measure obtained a two-thirds majority. Or they could reconvene in a special session on the budget.

The education deal taking shape in the Assembly treated kindergarten through 12th-grade schools in a fashion almost identical to a Senate-passed measure that has been pending in the Assembly since Saturday.

That measure would take back $1.1 billion the schools received last year in excess of what they were guaranteed by Proposition 98. This transaction has the effect of lowering by $1.9 billion the amount schools are entitled to in the coming year. To allow the schools to keep even with enrollment, the measure would advance them $732 million from money they are guaranteed by the Constitution over the next three years.

The proposed Assembly changes would count $100 million of that $732 million loan as part of the schools’ funding base, boosting their minimum guarantee in future years.

The Assembly’s higher-education deal, which appeared to have bipartisan support, would soften the blow to community colleges by increasing fees from $6 per unit to $9, compared to a $12 fee proposed in Senate-passed legislation and supported by Wilson. And the Assembly version would eliminate a provision in the Senate bill for substantially higher fees on students with bachelor’s degrees.

The Assembly proposal also would cut $101 million from state operations--cutting travel 50% and eliminating public information officers, among other things. The savings would be transferred to the University of California and the California State University systems.

Earlier Monday, the dispute over funding for kindergarten through community college programs threatened to blow up the budget deal and force lawmakers to remain in the Capitol beyond the scheduled end of their two-year legislative session.

The fight over school spending for this year was settled: Lawmakers and the governor had agreed that the elementary and secondary schools should get the same amount per student as they did in the last fiscal year.

But there was doubt about the legality of Wilson’s proposal to lower the Proposition 98 guarantee by refiguring last year’s books after the close of the fiscal year.

To address that legal uncertainty, Wilson wantedto include in the education bill a “poison pill” that would be activated if the state’s accounting change is ruled unconstitutional by the courts. In that case, the Proposition 98’s minimum funding guarantee would be suspended and the school budgets reduced anyway.

The alternative Wilson vetoed would have left Proposition 98 intact but would have forced the schools to give up $960 million in loans they are due to receive this year. Wilson said he rejected that approachbecause without a suspension of Proposition 98, the guarantee would soar to the point that the state would have to pay the schools an extra $3.7 billion next year.

“We’re not going to do that,” Wilson said. “We can’t do that.”

Asked why he did not simply ask the Legislature to suspend Proposition 98, Wilson conceded that there was insufficient support to generate the two-thirds majority needed to set aside the constitutional amendment.

Assembly Speaker Willie Brown (D-San Francisco) said that Wilson was acting like a “petulant child “ by insisting that the Assembly accept the Senate bill without change.

“You can’t do that,” Brown said. “In a democracy, people have to vote their conscience. Not Willie Brown or anybody else can demand they vote a certain way.”

State Supt. of Public Instruction Bill Honig, a frequent critic of the governor, said Wilson was unfairly holding up the budget over the issue.

“Let the governor explain that he’s vetoing this budget because what he’s doing is illegal and he wants to prevent somebody from suing,” Honig said.

The subtleties of the school funding battle were lost on nearly 2,000 protesters who filled the corridors outside Wilson’s office Monday afternoon. The demonstrators, mostly disabled people and their families, called on the governor to sign the budget immediately so that the state can again make payments to nonprofit agencies that care for the disabled. Many of these centers are threatening to close their doors if they are not paid this week.

The protesters were faced with a daunting choice. The programs on which they depend are not being paid at all, but once a budget is signed, many of the same programs will have their annual funding cut.

“It’s really rough,” said Patty Gants, whose son Zachary had a stroke at birth and now depends on speech, vision and physical therapy. “It’s getting worse and worse.”

Times staff writers Virginia Ellis, Jerry Gillam and Dan Morain contributed to this article.

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